Grassley now lists higher payment limitations

Iowa Sen. Chuck Grassley must think cotton and rice farmers deserve a break on farm program payment limits — but not too much of one.

Grassley raised the limit on the total amount a farmer may receive in farm program payments from $225,000 to $300,000 in the amendment he introduced in a Senate Budget Committee markup session March 13.

But his proposal would also eliminate the three-entity rule that allows larger farming operations to receive additional payments, and it would put a $200,000 lid on the use of generic commodity certificates, according to Washington reports.

The Budget Committee passed the amendment to its FY2004 Budget Resolution by a vote of 14-9 with all 11 Democrats and three Republicans — Grassley, Jud Gregg of New Hampshire and John Ensign of Nevada — voting for it. Budget Committee Chairman Don Nickles of Oklahoma argued against the amendment.

“I do not want to turn the entire floor debate on the budget into a rehashing of farm programs,” said Nickles, who predicted a floor fight over payment limits might jeopardize the entire budget resolution.

Senators voting for the amendment also rejected the arguments of a group of 24 farm, conservation and wildlife organizations who had written a letter to Nickles and House Budget Chairman Jim Nussle of Iowa urging them not to tamper with the funding levels in the 2002 farm bill.

The major difference between Grassley's latest proposal and the one he authored along with Sen. Byron Dorgan, D-N.D., last year appears to be the $300,000 payment limit for an individual farmer. Last year's amendment, which was included in the Senate version of the 2002 farm bill, but deleted from the farm bill conference report, limited farm program payments to $225,000 per individual farmer or $275,000 for a farmer and his wife.

Grassley said the $1.398 billion in savings from the latest version of the amendment should be applied to restoring funding for the Conservation Security Program, which fellow Iowa Sen. Tom Harkin authored. The Bush administration has recommended funding for the program be trimmed from an estimated $4 billion to $2 billion over 10 years.

Under Grassley's new proposal, farmers would be limited to $40,000 in direct payments, $60,000 in counter-cyclical payments and $200,000 in loan deficiency payments. Farmers could continue to request generic commodity certificates but only up to the $200,000 limit on LDPs.

The 2002 farm bill contains limits of $40,000 for direct payments, $65,000 for counter-cyclical payments and $75,000 for loan deficiency payments for each entity a farmer participates in. There is no limit on generic commodity certificates.

Most analysts count the farm bill limit on program payments at $360,000 based on farmers participating in three entities (one full entity and half of two others).

“Farm payments that were originally designed to benefit small and medium-sized family farmers have contributed to their own demise,” Grassley said following the vote. “Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices, driving many family farmers off the farm.”

The Washington representative for one farm organization said Southern senators have already begun working to try to make sure the Grassley amendment doesn't make it out of the Senate.

“Sen. Thad Cochran of Mississippi has been making phone calls to Sen. Nickles and other committee chairmen, telling them that with the ink barely dry on the new farm bill, this is not the appropriate time to be making changes,” the staff member said.

“Sen. Jim Tallant from Missouri has also been working against the bill. Being from a border state with constituents in cotton and rice country and in grain country, he's in a much better position to see the impact this would have on commercial farming operations.”

The Senate Budget Committee also voted to modify several mandatory spending programs in agriculture for a savings of $321 million in the 2004 fiscal year and $1.1 billion over 10 years. The savings would include $240 million from the Initiative for Future Agriculture and Food Systems and $80 million from crop insurance modifications.

According to documents released by the committee, the Budget Resolution assumes the Conservation Security Program would be limited to $2 billion over 10 years for savings of $1.8 billion.

The Senate panel's cuts were miniscule compared to those announced by House Budget Committee Chairman Jim Nussle. Nussle's proposal would cut $618 million from farm bill spending in FY 2004, $5.7 billion for FY 2004-08 and by $19.2 billion over the 10 years of the Congressional Budget Resolution.

Most of the reductions would be accomplished by requiring each authorizing committee except Defense and Homeland Security to “make a 1 percent cut from last year's funding level to target waste, fraud and inefficiencies in the programs.”